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LPs Push for VCs to Disclose More About Partners

When university endowment funds, charities and other investors consider putting money into a venture capital firm, they typically investigate the firm’s financial performance and how it competes with other firms for good investments. Some make as many as 30 or 40 calls, following up on references provided by the firms.

One question that typically isn’t asked is about the personal behavior of a firm’s partners—such as whether anyone has been the subject of sexual harassment complaints from entrepreneurs. But in the wake of the uproar surrounding half a dozen women’s complaints about Binary Capital co-founder Justin Caldbeck, there are signs investors want that to change.

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Ms. Nortman suggested one simple idea for limited partners who want to stay on the lookout for bad behavior: Network more with women venture capital partners and entrepreneurs, connecting on LinkedIn and staying in touch. When they are doing due diligence on a firm, “Call the women. Call the women,” she said. Often, women hear things that male partners do not, she said.

--Hannah Natanson contributed to this article.

Hunter Walk and Matt Greenfield commented on this article.
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“It’s appropriate for LPs to get the information and clearly, that’s not happening today.”